EUR/USD still eyes a test of 1.1630 – UOB

The pair’s outlook stays neutral in the near term while it could re-visit the 1.1630 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “EUR extended its recent up-move and hit a high of 1.1623 yesterday. While the rapid and sharp advance over the past several days has moved into overbought territory, there is no sign of weakness just yet and it is too early to expect a sustained pullback. From here, barring a break below 1.1550, there is chance for EUR to test the major 1.1630 resistance first before a pull-back can be expected. At this stage, a move beyond the next resistance at 1.1670 seems unlikely”.

Next 1-3 weeks: “We shifted to a neutral stance on Tuesday (21 Aug, spot at 1.1485) and held the view the ‘robust’ recovery in EUR could lead to a test of the major 1.1630 resistance. We added, it could “take several days before this level would come into the picture”. However, the pace of the anticipated rebound was faster than expected as EUR hit a high of 1.1623 yesterday (22 Aug) before closing higher for the sixth consecutive days. The rapid recovery is running too fast, too soon but we still see chance for a ‘full-test’ of 1.1630 before a significant pull-back can be expected. The next resistance above 1.1630 is at 1.1670 and at this stage, we apportion a low probability for a clear break above this level. On the downside, the ‘key support’ is currently at 1.1470 (was previously at 1.1420) and only a break of this level would indicate that the current upward pressure has eased”.